Ener-G goes against the grain with gluten-free products

Ener-G Foods Inc., which has for decades filled a food niche so narrow few knew it existed, is now growing so fast that it’s straining to meet demand.

That niche is gluten-free foods, a market that grew at a compounded 28 percent annual rate over the last four years, to $4.2 billion for the United States, according to Packaged Facts, a Maryland-based food industry research company. Packaged Facts expects the U.S. market to exceed $6.6 billion by 2017.

Gluten is a protein complex found in wheat and many other grains. Eating gluten-free food can be a life-and-death matter for sufferers of celiac disease, but many more people are learning they have milder forms of gluten intolerance, and believe they are healthier if they avoid gluten.

Ener-G President Sam Wylde III seems a bit bemused by the fact that the sleepy company his father Sam Wylde purchased in 1962 has suddenly become a galloping horse. And Wylde adds that he’s been fending off a stream of purchase offers from much-larger food companies, because he wants to continue developing new food products for people with medical conditions in his own way.

“We’re just kind of doing our own thing,” he said from his slightly disheveled, yellow-painted headquarters office in South Seattle. On the wall behind him was a map of the world. His tiny white dog Bamm-Bamm sniffed around the floor.

“I like to invent stuff,” Wylde said. “It’s what I like to do; it interests me. I want to be able to pursue those avenues. That’s a reason for staying independent.”

His company hit $11 million in sales last year, and is growing at a 10 percent annual rate, he said.

Right outside Wylde’s office is the company’s showroom, actually a narrow hallway leading out to the noise of passing trucks on Seattle’s First Avenue South, a major industrial artery.

Lined up on five rows of shelves are samples of just some of the 120 different items the company makes, including 18 types of “loaves” (the company does not use the word bread), 11 crackers and snacks, and nine mixes for making waffles, pancakes, cakes and cookies. All are gluten free, and nearly all are packed by the company’s proprietary vacuum system, which allows them to be shipped in small batches at room temperature, without worrying about refrigeration.

Crammed into a 35,000-square-foot factory, Energ-G’s 60 Seattle employees run the plant around the clock, trying to keep up with a tidal wave of orders.

To meet demand, Wylde is buying new equipment, and he installed a new “proofing box” in late March to regulate the growth of yeast. A new Swedish oven arrives in April, and a packing machine from Germany is due in three months.

“Right now, it’s a struggle. That’s why we’re buying the new equipment. Eventually we’ll have to get more square footage,” Wylde said. “Our growth rate is determined by how fast we can expand production.”

The company also finds it’s fighting for market visibility, now that much-larger food companies like Kellogg’s and Kraft foods, with very deep pockets, are entering the sector.

“If you don’t expand fast enough when the big guys are jumping in, you lose market share,” he said. “If you can’t fill shelves to fill demand, you lose shelf space, and a lot of other companies are looking for shelf space.”

Part of what makes Ener-G competitive is the propriety processing-and-packing technologies Wylde and his team developed over years.

So sensitive are the technologies that a guest, who has visited high-security factories assembling the Air Force’s most advanced fighter aircraft, was not allowed inside Ener-G’s production area.

Ener-G also operates a 12,000-square-foot plant in Wolemsdorf, Pa., closer to the major East Coast markets. Wylde is considering expanding Ener-G in Pennsylvania, rather than in the more cramped confines of Seattle.

Wylde, 62, isn’t technically a food scientist. He started off seeking a degree in biology but instead completed an MBA at Willamette University in Salem, Ore. But that hasn’t kept him from becoming a respected, although unique, researcher in the industry.

“He’s very quirky, but very nice,” said Cynthia Cooper, executive director of the Gluten Intolerance Group, a national association based in Auburn. The group offers information and support to people who are gluten intolerant.

“I think of Sam as being a very bright, genius-type person,” she said.

Ener-G is among the industry leaders in reducing the levels of gluten in its products: less than 5 parts per million, the lowest concentration commonly measured.

While the federal government is on the verge of setting a standard of 20 parts per million for products to earn a gluten-free label, lower-gluten products like Ener-G’s are the gold standard for people needing to avoid gluten, Cooper said.

She said that organizations like hers will continue to certify Ener-G’s products as exceeding the federal standards, even when the federal regulations are in place. She adds that this will set Ener-G and similar companies apart from the onslaught of new entrants into the market.

“What Ener-G has over these companies is their very long reputation for making sure they’ve got a squeaky-clean product,” she said. “Ener-G has always strived for the very lowest parts per million in their products.”